Poverty, wealth concentration bigger problems than subsidy — Experts

•Insist subsidy policies should serve citizens, rather than narrow interests

Nigeria’s economic debate is shifting away from fuel subsidies, with economists and development experts warning that poverty and extreme wealth concentration pose deeper threats to growth and stability.

They argue that while subsidy reforms have dominated policy discussions, the widening gap between a small wealthy elite and millions struggling for basic needs is what is actually holding back progress.

Bongo Adi, a distinguished Professor of Economics at Lagos Business School, Pan-Atlantic University, said Nigeria, as a developmental state, should adopt problem-driven iterative adaptation in policy formulation, rather than rigid one-track positions.

He explained that countries oriented towards developmentalism change course when evidence demands it, re-evaluating policies to deliver the greatest good for the largest number of people.

Adi identified high poverty and inequality as the core issues. “Nigeria has reappeared as the poverty capital of the world. So when you have 165 million living below the poverty line, that is really a cause for concern,” he said. Linked to this is extreme wealth concentration.

Drawing on Thomas Piketty’s ‘Capital in the 21st Century’, Adi noted that when the rate of return on capital exceeds the rate of economic growth, wealth concentrates further in few hands. This leads to underutilisation of assets, such as high vacancy rates in properties built not for occupation but as stores of value.

He observed that during earlier periods of high growth averaging seven percent for a decade and foreign reserves around $67 billion, subsidy was not a major problem and poverty was lower. Current macroeconomic stabilisation, with reserves rising toward $55 billion, is positive, yet the deeper structural problems remain.

On AIT’s Kakaaki programme, Dr Baba Yusuf, president of the Nigerian Economic Society, emphasised institutional arrangements and transparency: “The more important questions are: Who benefits from it? How much does it cost? Who administers it? How is it monitored? What prevents diversion? Does it achieve its intended social and economic purpose?” Subsidy policies must serve citizens rather than narrow interests.

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He noted that declining purchasing power affects households and businesses alike. Macroeconomic indicators may be improving, but they must be sustained and coordinated with microeconomic realities so that stability reaches firms, workers and households. All tiers of government—federal, state and local—must act in concert, Musa stated.

He stressed that economic recovery must move beyond statistics to higher production, employment, stronger purchasing power and better living conditions.

He called for a tradable economic policy focused on goods and services that can be sold domestically and internationally—agricultural products, processed foods, manufactures, textiles, pharmaceuticals, digital and creative services—rather than exporting raw materials and importing finished goods.

Musa said sound governance—transparency, accountability, competence, continuity and responsible use of public resources—is the foundation of growth. Investors require clear rules, predictable taxes, reliable infrastructure and effective institutions.

Low production, driven by unreliable electricity, high transport costs, expensive credit, poor infrastructure, insecurity and inconsistent policies, keeps the country import-dependent and inflation-prone.

The solution lies in expanding productive capacity through factories, farms, processing facilities and technology businesses.

With about 3.5 million young people entering the labour market each year, government employment alone cannot absorb them. The private sector in manufacturing, agriculture, construction, technology, logistics and creative industries must expand.

Dr Ayinde O. Ayinde, a researcher at Covenant University, Ota, argued that the question is not simply removal or restoration of subsidy. Reversal without fiscal discipline and safeguards risks resurrecting rent-seeking, while retention without social protection and productive investment risks household impoverishment.

“The intellectually superior pathway is therefore neither unconditional removal nor nostalgic restoration, but a transparent, targeted and fiscally sustainable energy-pricing compact, underpinned by productivity, competition, social protection and accountability.”

Prince Adewole Adebayo, presidential candidate of the Social Democratic Party for the 2027 elections, speaking at the Nigerian Bar Association conference, said the subsidy debate is no longer the central issue.

“Subsidy is like giving somebody a scholarship to a university that does not exist. The scholarship is useless,” he stated. Priority should shift to affordable petroleum products, lower energy costs, a stable exchange rate and measures that raise productive capacity.

The experts collectively insist that Nigeria must move beyond the politics of cheap versus expensive fuel toward the economics of affordable prosperity, where citizens earn real incomes, enterprises become competitive, and every reform yields measurable developmental dividends.